UK IFAs can make their businesses more attractive in times of consolidation by using Luxembourg-regulated funds, according to KMG Sicav-SIF.
After the Retail Distribution Review (RDR) proposed changes to the operation of IFA businesses in the UK, some commentators are anticipating an area of 'unprecedented consolidation' as many IFA owners are expected to retire or sell up.
"By setting up their own funds, IFAs can create embedded value by increasing their renewable income and this will, in turn, enhance their position," said Kevin Mudd, founder and director of KMG Sicav-SIF.
He believes planning ahead is vital to increase the value of an IFA's business by taking more control of 'funds under influence' and making them 'funds under management'.
Own funds can make it easier to raise the capital needed to acquire other businesses, while for IFAs seeking to be acquired, own funds can raise the price a suitor would be prepared to pay, according to Mudd.
"Either way, IFAs should consider launching their own funds, now more than ever," he added.
KMG Sicav-SIF creates Luxembourg-regulated funds tailored to IFAs' asset choices and strategies with no compliance or regulations. Funds can be freely marketed to clients and sit in several platforms and portfolio bonds, as well as being suitable for Sipps.
Regular reminders and updates
9 December 2019 deadline
Joe McDonnell joins as head of portfolio solutions (EMEA)
Adviser of the Year - South East
Fidelity Multi Asset CIO's outlook